NERC’s 2007-2016 Long-TermReliability Assessment (LTRA) Workshop:Natural Gas Dependency in New England

Michael I. HendersonISO New England Inc.

2 Natural Gas Dependency

In New England

New England’s Electric Power Grid

• 6.5 million customer meters– Population: 14 million

• 350+ generators• 8,000+ miles of high voltage

transmission lines• 12 interconnections to three

neighboring systems:– New York, New Brunswick,

Quebec

• 31,000 megawatts (MW) of installed generating capacity

• 300+ market participants• Summer peaking system

– Summer: 28,130 MW (8/06)– Winter: 22,818 MW (1/04)

ISO and Local Control Centers

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In New England

New England’s Capacity – Summer 2007

Pumped

Storage1,689

Coal

2,782

Nuclear

4,555

Oil

6,730

Hydro

1,648

Non-Hydro

Renewables/Misc.917

Gas

12,205

Oil

22.1%

Nuclear

14.9%

Coal

9.1%

Pumped

Storage5.5%

Hydro

5.4%

Non-Hydro

Renewables/Misc.3.0%

Gas

40.0%

Generation capacity mix by primary fuel type, 2007, summer ratings, MW and percentage.Note: “Non-Hydro Renewables” include biomass, refuse, landfill gas, and wind.

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In New England

New England’s Energy Production - 2006

1.2%

5.4%6.3%

15.2%

28.9%

39.7%

3.3%

0

10,000

20,000

30,000

40,000

50,000

60,000

1,00

0 M

Wh

New England electric energy production by fuel type, 2006, in 1,000 MWh.Note: “Non-Hydro Renewables” include biomass, refuse, landfill gas, and wind.

5 Natural Gas Dependency

In New England

New England’s Gas-Fired Fleet

• Potential Concerns:– “Just-in-time” delivery of fuel source– Unplanned outage or closure of the regional LNG facility– LNG shipping disruption or embargo– Loss of natural gas pipeline or compressor stations – Wholesale electricity’s exposure to natural gas price volatility

• Actual Experience:– Temporary shutdown of regional LNG facility – Post 9/11– Greater Northeast Cold Snap – January 14-16, 2004– Hurricanes Katrina & Rita - Fall of 2005

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In New England

Regional Response

• Developed robust rules and operating procedures to manage the electric system through short or long-term fuel supply or delivery constraints:

– Appendix H of Market Rule #1: “Operations During Cold Weather Conditions.”

– Operating Procedure No. 21: “Action During an Energy Emergency.”

• Added provisions in new markets to promote resource availability at time of need:

– Forward Capacity Market (FCM)– Locational Forward Reserve Market (LFRM)

• Created the Electric/Gas Operations Committee (EGOC)– Increased communications and coordination with the regional natural gas

sector via the Northeast Gas Association (NGA)

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In New England

Regional Response – cont’d

• Dual fuel conversions of single-fuel, gas-only power stations

• Newly proposed LNG terminals and expansion of regional natural gas grid

• Confirm existing practices are compliant with FERC Order 698: (electric & gas sector communications)

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In New England

Inter-Regional Response

• 3 ISO/RTO MOU on Natural Gas:– Transfer of knowledge between ISO-NE, NYISO & PJM– Coordinated operations & planning– Continuous pre & post-seasonal discussions– Sharing of information, studies & methodologies– Refinement of communications protocols and contact lists– Direct communications between Control Room and Gas Control– Table-Top exercises

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In New England

Long-Term Outlook

• ISO-NE Regional System Plan:– Annual 10-year plan– Loads, generation, transmission & demand-side– Fuel diversity, availability, deliverability

• ISO-NE’s Scenario Analysis:– New England will continue to depend on natural gas– Interconnection queue predominately gas-fired– Relatively low air emissions– Renewable Portfolio Standards (RPS)

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In New England

Long-Term Outlook – cont’d

• NERC LTRA– Resource adequacy assessment– Fuel supply & delivery assessment

• NPCC Triennial Review of Resource Adequacy– 5-year resource adequacy review (LOLE)– Comprehensive review every three years– Interim review every year

• Emerging Issue:– LNG Interchangeability

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In New England

Operable Capacity Analysis

• New England’s total installed capacity: 33,425 MW (winter)– 16,733 MW (50%) are capable of burning natural gas

(as either a startup, primary, secondary or stabilization fuel)– 8,587 MW (26%) are single-fuel, gas-only stations– 8,146 MW (24%) are fully functional, dual-fuel stations (gas/oil)

• 2007 Regional System Plan – Assessed the amount of gas-only resources required under winter peak conditions:

– 50/50 load:• 2007/08 ~ 450 MW • 2011/12 ~ 1,650 MW

– 90/10 load:• 2007/08 ~ 1,400 MW• 2011/12 ~ 2,700 MW

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In New England

Market Rules and Operating Procedures

• Appendix H of Market Rule #1: “Operations During Cold Weather Conditions”

– 7-Day Forecast Projects Cold Weather Conditions– Cold Weather Watch, Warning & Event– Cold Weather Event triggers rollback of wholesale electric market

timelines to align with natural gas nomination deadlines

• Operating Procedure No. 21: “Action During an Energy Emergency”

– Triggered by fuel supply shortage or deliverability constraint– Requests fuel switching to non-constrained fuels – Allows collection of fuel inventory data from generation fleet– Dispatch system to manage and preserve fuel inventories

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In New England

New Natural Gas Infrastructure

Source: Northeast Gas Association (NGA)

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In New England

New Natural Gas Infrastructure

Source: Northeast Gas Association (NGA)

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In New England

Conclusions

• New England will continue to rely heavily on natural gas-fired generation (primary finding from ISO-NE’s Scenario Analysis)

• Close coordination between electric and gas industries is required

• Markets promote unit availability at time of need – Dual fuel & firm fuel purchases

• Renewable Portfolio Standards (RPS) and demand-side resources will assist in diversifying the region’s fuel supply

• Newly proposed LNG terminals and expansion of the regional natural gas grid will improve the amount of natural gas supply

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In New England

Appendix

• 2007 Regional System Plan:– http://www.iso-ne.com/trans/rsp/index.html

• ISO-NE’s Scenario Analysis:– http://www.iso-ne.com/committees/comm_wkgrps/othr/sas/

index.html

• NERC LTRA– http://www.nerc.com/~filez/rasreports.html

• NPCC Triennial Review of Resource Adequacy:– http://www.npcc.org/adequacy.cfm

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In New England

Appendix – cont’d

• Appendix H of Market Rule #1: Cold Weather Operations– http://www.iso-ne.com/regulatory/tariff/sect_3/

mr1_appendix_h_11-27-06.pdf

• Operating Procedure No. 21: Action During an Energy Emergency

– http://www.iso-ne.com/rules_proceds/operating/isone/op21/index.html

• Northeast Gas Association:– http://www.northeastgas.org

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In New England

QUESTIONS

Michael I. HendersonDirector – Regional Planning and Coordination

ISO New England Inc.(413) 535 – 4166

mhenderson@iso-ne.com